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ACKNOWLEDGEMENT
CHAPTER - I
Introduction
Need for the study
Objectives
Methodology
Limitations
CHAPTER - II
Industry Profile
Company Profile
CHAPTER - III
Theoretical frame work of the study.
CHAPTER - IV
Tabulation and Analysis
CHAPTER - V
Summary
Findings
Suggestions
BIBLOGRAPHY
ANNEXURES
CHAPTER – I
INTRODUCTION
NEED FOR THE STUDY
OBJECTIVES
METHODOLOGY
LIMITATIONS
INTRODUCTION OF THE STUDY
The term capital market refers to the arrangements for facilitating the
borrowing and lending of long term funds. In its widest sense, it consists of a
series of channels through which the savings of the community are made
available for industrial and commercial enterprises and public authorities. The
tone of the capital market largely depends on the economy of the country and
therefore, depends on the available savings and investments on one hand and
the performances of the industry on the other. Among other factors that would
influence the tone of the capital and stock market are the monsoon, the
agriculture, the Industrial growth and in particular the performance of the
corporate sector, as they too have a controlling effect on the economy of the
country. In particular the government policy, the psychological expectations and
host of other factors play a very prominent role in influencing the capital markets.
The capital market in India can be categorized into two types:
1. Organized 2. Unorganized
The funds for long term capital come from individual investors, corporate
savings, government savings, foreign investments, banks, financial institutions,
investment trusts, life insurance corporation and international financial agencies,
industry, government and semi government institutions are the potential users in
the organized sector it self. Since the supply of funds for unorganized sector falls
short of demand, the interest rates are kept high.
The India Info line group has a significant presence across the
country with over 500 branches in over 300 cities across India. All these Offices
are networked and are connected with the corporate office in Mumbai. The
Group has invested significantly in technology and research, the results of which
are there for everyone to see. The 5paisa trading is one of the most advanced
Platforms available to retail investor in India. The group has memberships on
BSE and NSE for equities trading, depository participant with NSDL and CDSL
and on MCX and NCDEX for commodities trading. It has a SEBI license for
portfolio Management under which, various schemes are offered.
The company offers the products and financial services space with
offerings ranging from Equity research, Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, Go bonds and other small savings instruments to loan
products and Investment banking.
OBJECTIVES OF THE STUDY
their funding.
1. The study was confined only to the online trading system because the subject
chosen is comparatively a new one and the scope of the study is very vast.
INDUSTRY PROFILE
COMPANY PROFILE
INDUSTRY PROFILE
Selection of a Broker
The first thing is to do is to select a broker through whom the purchase or
sales is to be made. Placing an order: after selecting the broker the client places
an order for purchase or sale of securities.
Contract Note
The buying and selling brokers prepare notes after their mutual consent
next day.
Settlement
The spot dealing are settled there in full. The settlement for ready delivery
and forward contacts is one with a different procedure.
Floor Brokers
They are authorized clerks and sub brokers who enter the trading floor
and execute orders for the clients or for members.
Jobbers and Market Makers
They are members who are ready to buy and sell simultaneously in
selected scrip’s, offering bid and offer rates for the brokers and sub brokers on
the trading floor and earning profit through the margin between buying and
selling rates. Markets makers undertake this work compulsorily for some
companies and bank finance is available to them.
Arbitrageurs
They are members who do inter market deals for a profit through
differences in prices as between markets.
Badla Financers
They are members who finance carry forward deals in specified group for
a return in the form of interest, called badla rate. They lend money or shares for
the brokers who overbuy or oversell respectively at the time of settlement. Badla
is a carry forward facility from one settlement to another without taking a delivery
up to a maximum period of 90 days at a time, now reduced to 7—15 days.
TYPES OF SPECULATORS
There are different types of speculators who are active on stock exchanges in
India. They are known as
• Bull
• Bear
• Stag
• Lame Duck
Bull
A bull of Tejiwala is an operator who expects prices to rise in future and
sells securities in the future. A bull tends to throw his victims up in the air
Bear
A bear of Mandiwala speculator expects prices to fall in future and sells
securities at present with a view to purchase them at lower prices in future. Just
as bear presses their victim down to the ground.
Stag
A Stag is a cautious speculator in the stock exchange. He applies for
shares in new companies and expects to sell them at premium if he gets an
allotment. He sells the shares before being called to pay the allotment money.
Lame Duck
When a bear finds it difficult to fulfill his commitment, he is called
struggling like a lame duck.
The BSE has allowed the expansion of online trading system to its
members in other cities having terminals since August 1995. The daily turnover
in BSE varies from Rs.400-800 crores. Brokers trading in NSE follow BSE to
know the market.
SENSEX
The index in BSE is Sensex’. It stands for Sensitivity index. Senses
consist of 30 selected top companies of BSE based on the capitalization or on
the performance weight age of the scrip’s. SENSEX is not only scientifically
designed but also based on globally accepted construction and overview
methodology. First complied in 1986, SENSEX is a basket of 30 constituent
stocks responding a sample of large, liquid and representative companies. The
base year of SENSEX is 1978-79 and the base value is 100. The index is widely
reported in both domestic and international markets through print as well as
electronic media.
The volume of daily trade in NSE is around Rs. 1,500/- to Rs.2, 000/-
crores. The market capitalization of listed companies in NSE is Rs.2.52 lakh
crores. There are more than 1,000 permitted securities for trading in NSE.
CAPITAL MARKET
An efficient capital market is a pre-requisite of economic development. An
ideal capital market is one where finance is used as handmaid to serve the
needs of industry. The capital market must facilitate the movement of capital to
the point of highest yield.
The main components apart from financial institutions of a capital market are:
Primary market
Secondary Market
• Primary Market
The new issues market where new securities, i.e., shares or bonds that have
never been previously issued are offered represents the primary market. Both the
new companies and the existing ones can raise capital in the primary market.
The primary market helps the corporate enterprises in securing their funds that
are generally used for setting up new corporate enterprises or going in for
expansion, diversification, growth or modernization.
All stock exchanges have two parts: The new issue market or primary
market or primary market and Secondary market. While the primary market
supplies fresh or additional capital to the companies, the securities already
issued or floated on the primary market are traded on the secondary market. The
secondary market doesn’t play any direct role in making funds available to the
corporate; its role in this respect is only indirect, i.e., it helps to encourage
investors to invest in industrial securities by making them liquid, i.e., by providing
facilities for continuous, regular, and buying and selling of those securities.
Primary market deals in new securities while secondary markets deals in already
existing or old securities, which have been listed on it. The investors acquire or
buy securities directly from the companies on the primary market, while the trade
securities so acquired among themselves on these stock market.
TRADING SYSTEM
NSE operates on the “National Exchange for Automated Trading” (NEAT)
system, a fully automated screen based trading system, which adopts the
principle of an order driven market. NSE consciously opted in favor of an order
driven system as opposed to a quote driven system. This has helped reduce
jobbing spreads not only on NSE but in other exchanges as well thus reducing
transactions costs.
Action Market
In the Auction Market, the Exchange on behalf o trading members for
settlement related reasons initiates auctions. There are 3 participants in this
market.
• Initiator - The party who initiate the auction process is called an initiator.
• Competitor - The party who enters orders on the same side as of the
initiator.
• Solicitor - The party who enters orders on the opposite side of the initiator.
Spot Market
Settlement periods vis-à-vis normal market. These orders do not have any
special terms attributes attached to them. Currently the spot Market is not in use.
Terms System-Orders Books
The NSE trading systems provides complete flexibility to members in the
kinds of orders that can be placed by them. Orders are first numbered and time-
stamped on receipt and then immediately processed for potential match. Every
order has a distinctive orders number and a unique time stamp on it. if a match is
not found, then the orders are stored in different books’. Orders are stored in
price-time priority in various books in the following sequence. Best Price. Within
Price, by time Priority. Price priority means that if two orders are entered into the
system, the order having the best price gets the higher priority. Time priority
means if two orders having the same price are entered, the order that is entered
first gets the higher priority.
Stop-Loss Book
Stop Loss orders are stored in this book till the trigger price specified in the
order is reached or surpassed. When the trigger price is reached or surpassed,
the order is released in the Regular lot book.
The stop loss condition is met under the following circumstances: Sell order A
sell order in the Stop Loss book gets triggered when the last traded price in the
normal market reaches or fails below the trigger price of the order.
Buy Order - A buy order in the Shop Loss book gets triggered when the last
traded price in the normal market reached or exceeds the trigger price of the
order.
Auction Book
This book contains orders that are entered for all auctions. The matching
process for auction orders in this book are initiated only at the end of the solicitor
period.
1. Time Conditions
DAY - A Day order, as the name suggests, is an order which is valid for the day
on which it is entered. If the order is not matched during the day, the order gets
cancelled automatically at the end of the trading day.
GTC - A Good Till Cancelled (GTC) order is an order that remains in the system
until it is cancelled by the Trading Member. It will therefore be able to span
trading days if it does not get matched. The maximum number of days a GTC
order can remain in the system is notified by the Exchange from time to time.
GTD - A Good Till Days / Date (GTD) order allows the Trading Member to specify
the days / date up to which the order should stay in the system. At the end of this
period the order will get flushed from the system. Each day / date counted is a
calendar day and inclusive of holidays. The days / date counted are inclusive of
the day / date on which the order is placed. The maximum number of days a
GTD order can remain in the system is notified by the Exchange from time to
time.
2. Price Conditions
Limit Price / Order - An order that allows the price to be specified while entering
the order into the system.
Market Price / Order - An order to buy or sell securities at the best price
obtainable at the time of entering the order.
Stop Loss (SL) Price / Order - The one that allows the Trading Member to place
an order which gets activated only when the market price of the relevant security
reached or crosses a threshold price. Until then the order does not enter the
market.
A sell order in the Stop Loss book gets triggered when the last traded
price in the normal market reaches or fails below the trigger price of the order. A
buy order in the Stop Loss book gets triggered when the last traded price in the
normal market reached or exceeds the trigger price of the order.
E.g. If the stop loss buy order, the trigger is Rs.93.00, the limit price is
Rs.95.00 and the market (last traded) price is 90.00, then this order is released
into the system once the market price reached or exceeds 93.00. This order is
added to the regular lot book with time of triggering as the time stamp, as a limit
order of 95.00.
3. Quantity Conditions
Disclosed Quantity (DQ) An order with a DQ condition allows the Trading
Member to disclose only a part of the order quantity to the market. For example,
an order of 1000 with a disclosed quantity of 200 will mean that 200 is displayed
to the market at a time after this is traded. Another 200 is automatically released
So on till the full order is executed. The Exchange may set a minimum disclosed
quantity criteria from time to time.
MF - Minimum fill (MF) orders allow the Trading Member to specify the minimum
quantity by which an order should be filled. For example, an order of 1000 units
with minimum fill 200 will require that each trade be for at least 200 units.
AON - All or None orders allow a Trading Member to impose the condition that
only the full order should be matched it will stay in the books till matched of
cancelled.
He becomes a client
Professional
Retail
Institutional
Professional Clients
The Client involves in the speculation activities. He buys and sells shares on
daily basis. His brokerage charges will be low.
Institutional Clients
Here the broker trades on NSE on behalf of the institution. Then the client can
trade on the NSE Scripts on “Automated Screen”.
How to Trade
He can buy and sells shares through “NEAT” National Exchange Automated
Trading)
It adopts the order driven market against the quote driven market.
NSE TRADING SYSTEM
Trading
NSE introduced for the first time in India, fully automated screen based
trading. It uses a modern, fully computerized trading system designed to offer
investors across the length and breadth of the country a safe and easy way to
invest.
The NSE trading system called “National Exchange for Automated Trading”
(NEAT) is a fully automated screen based trading system, which adopts the
principle of an order driven market.
Market Timings
Trading on the equities takes place on all days of the week (except
Saturdays and Sundays and holidays declared by the Exchange in advance).
The market timings of the equities segment are:
Normal Market Open : 09:55 hrs
Normal Market Close : 15:30 hrs
The closing session is held between l5:50 hours and 16:00 hours.
Limited Physical Market Open : 09:55 hrs
Limited Physical Market Close : 15:30 hrs
Market Segments
1. Rolling Settlement
In a rolling settlement, each trading day is considered as a trading period and
trades executed during the day are settled based on the net obligations fore the
day.
At NSE trades in rolling settlement are settled on a T+2 basis i.e., on the 2 nd
working day. For arriving at the settlement day all intervening holidays, which
include bank holidays, NSE holidays, Saturdays and Sundays are excluded.
Typically trades taking place on Monday are settled on Wednesday, Tuesday’s
trades settled on Thursday and so on.
3. Institutional Segment
The Reserve Bank of India had vide a press release on October 21, 1999,
clarified that Inter Foreign institutional Investor (Inter-FIT) transactions do not
require prior approval or post-facto confirmation of the Reserve Bank of India,
since such transactions do not effect the percentage of overall holding in Indian
Companies (Inter FIT transactions are how ever nor permitted in securities where
the FII holdings have already crossed the overall limit due to any reason).
To facilitate execution of such inter Institutional deals in companies where the
cut-off limit of FIT investment has been reached, the exchange introduced a
JICW market segment on December 27, 1999.
The Securities where FIT investors and FIT holdings has reached the cut off
limit as specified by RBI (2% lower than the ceiling specified by RBI) from time to
time would be available for trading in this market type for exclusive selling by FIT
clients. The cut off limits for companies with 24% ceiling is 22%, for companies
with 30% ceiling, is 28% and for companies with 40% ceiling is 38%. Similarly,
the cut off limit for public sector banks (including State Bank of India) is 18%
whose ceiling is 20%. The list of securities eligible / become ineligible for trading
in this market type would be notified to members from time to time.
The Organization
The National Stock Exchange of India Limited has genesis in the report of
the High Powered Study Group on Establishment of New Stock Exchanges,
which recommended promotion of a National Stock Exchange by financial
institutions (FIs) to provide access to investors from all across the country on an
equal footing. Based on the recommendations, NSE was promoted by leading
Financial Institutions at the behest of the Government of India and was
incorporated in November 1992 as a tax-paying company unlike other stock
exchanges in the country.
On its recognition as a stock exchange under the Securities Contracts
(Regulation) Act, 1956 in April 1993, NSE commenced operations in the
Wholesale Debt Market (WDM) segment in June 1994. The Capital Market
(Equities) segment commenced operations in November 1994 and operations in
Derivatives segment commenced in June 2000.
Mission
NSE's mission is setting the agenda for change in the securities markets
in India. The NSE was set-up with the main objectives of:
Establishing a nation-wide trading facility for equities, debt instruments
and hybrids,
Ensuring equal access to investors all over the country through an
appropriate communication network,
Providing a fair, efficient and transparent securities market to investors
using electronic trading systems,
Enabling shorter settlement cycles and book entry settlements systems,
and meeting the current international standards of securities markets.
Corporate Structure
NSE is one of the first de-mutualised stock exchanges in the country, where
the ownership and management of the Exchange is completely divorced from the
right to trade on it. Though the impetus for its establishment came from policy
makers in the country, it has been set up as a public limited company, owned by
the leading institutional investors in the country.
From day one, NSE has adopted the form of a demuattualised exchange -
the ownership, management and trading is in the hands of three different sets of
people. NSE is owned by a set of leading financial institutions, banks, insurance
companies and other financial intermediaries and is managed by professionals,
who do not directly or indirectly trade on the Exchange. This has completely
eliminated any conflict of interest and helped NSE in aggressively pursuing
policies and practices within a public interest framework.
The NSE model however, does not preclude, but in fact accommodates
involvement, support and contribution of trading members in a variety of ways. Its
Board comprises of senior executives from promoter institutions, eminent
professionals in the fields of law, economics, accountancy, finance, taxation, etc,
public representatives, nominees of SEBI and one full time executive of the
Exchange.
While the Board deals with broad policy issues, decisions relating to
market operations are delegated by the Board to various committees constituted
by it. Such committees include representatives from trading members,
professionals, the public and the management. The day-to-day management of
the Exchange is delegated to the Managing Director who is supported by a team
of professional staff.
Membership
There are 890 trading members on the capital market segment, of which
around 86 per cent are corporate entities, while the rest are individuals and firms.
Of these 890 trading members, 89 trading members are also members of
wholesale debt market segment, all of which are corporate. There are 7 trading
members exclusively on wholesale debt market segment.
NSE Indices
The indices used by NSE are known under the following names:
Promoters
NSE has been promoted by leading financial institutions, banks, insurance
companies and other financial intermediaries:
Industrial Development Bank of India Limited
Industrial Finance Corporation of India Limited
Bank of Baroda
Canara Bank
Indian Bank
NSE Family
NSCCL
National Securities Clearing Corporation Ltd. (NSCCL), a wholly-owned
subsidiary of NSE, was set up in August 1995. It was the first clearing
corporation in the country to provide novation/settlement guarantee that
revolutionized the entire concept of settlement system in India. It commenced
clearing operations in April 1996. It has been set up to bring and sustain
confidence in clearing and settlement of securities; to promote and maintain short
and consistent settlement cycles.
NSDL
Prior to trading in a dematerialized environment, settlement of trades required
moving the securities physically from the seller to the ultimate buyer, through the
seller’s broker and buyer’s broker, which involved lot of time and the risk of delay
somewhere along the chain. To obviate these problems, NSE to promote
dematerialization of securities joined hands with LTI and IDBI to set up the first
depository in India called the “National Securities Depository Limited” (NSDL).
The depository system gained quick acceptance and in a very short span of time
it was able to achieve the objective of eradicating the paper from the trading and
settlement of securities.
NSE.IT
NSE.IT Limited, a 100% technology subsidiary of NSE, was incorporated in
October 1999. It provides the securities industry with technology that ensures
transparency and efficiency in the trading, clearing and risk management
systems. Additionally, NSE.IT provides consultancy services in the areas of data
warehousing, internet and business continuity plans. Amongst various products
launched by NSE.IT are NEAT XS, a Computer-To-Computer Link (CTCL) order
routing system, NEAT XS, an internet trading system and Probes, professional
broker’s back office system.
IISL
India Index Services and Products Limited (IISL), a joint venture of CRISIL and
NSE, was set up in May 1998 to provide indices and index services. It has a
licensing and marketing agreement with Standard and Poor’s (S&P), the world’s
leading provider of investible equity indices, for co-branding equity indices. IISL is
India’s first specialized company focusing upon the index as a core product. It
provides a broad range of services, products and professional index services. It
maintains over 90 equity indices comprising broad—based benchmark indices,
sect oral indices and customized indices.
NCDEX
NSE joined hand with other financial institutions in India viz., ICICI Bank,
NABARD, LIC, PNB, CRISIL, Canara Bank and IIFCO to promote the National
Commodity & Derivatives Exchange (NCDEX which provides for a world class
commodity exchange platform for Market Participants to trade in wide spectrum
of commodity derivatives. Currently NCDEX facilitates trading of 41 agro based
commodities, 2 precious metals, 6 base metal, 2 energy products and 3
polymers.
Significance of Logo
The logo of the NSE symbolizes a single nationwide securities trading
facility ensuring equal and fair access to investors, trading members and issuers
all over the country. The initials of the Exchange viz., N, S and E have been
etched on the logo and are distinctly visible. The logo symbolizes use of
state of the art information technology and satellite connectivity to bring
about the change within the securities industry. The logo symbolizes
vibrancy and unleashing of creative energy to constantly bring about change
through innovation.
Milestones of NSE
November 1992 Incorporation
April 1993 Recognition as a stock exchange
May 1993 Formulation of business plan
June 1994 Wholesale Debt Market segment goes live
November 1994 Capital Market (Equities) segment goes live
March 1995 Establishment of Investor Grievance Cell
April 1995 Establishment of NSCCL, the first Clearing Corporation
June 1995 Introduction of centralized insurance cover for all trading
members
July 1995 Establishment of Investor Protection Fund
October 1995 Became largest stock exchange in the country
April 1996 Commencement of clearing and settlement by NSCCL
April 1996 Launch of S&P CNX Nifty
June 1996 Establishment of Settlement Guarantee Fund
November 1996 Best IT Usage award by Computer Society of India
December 1996 Commencement of trading/settlement in dematerialized
securities
December 1996 Dataquest award for Top IT User
December 1996 Launch of CNX Nifty Junior
February 1997 Regional clearing facility goes live
November 1997 Best IT Usage award by Computer Society of India
May 1998 Promotion of joint venture, India Index Services & Products
Limited (IISL)
May 1998 Launch of NSE's Web-site: www.nse.co.in
July 1998 Launch of NSE's Certification Programme in Financial Market
August 1998 CYBER CORPORATE OF THE YEAR 1998 award
February 1999 Launch of Automated Lending and Borrowing Mechanism
April 1999 CHIP Web Award by CHIP magazine
October 1999 Setting up of NSE.IT
January 2000 Launch of NSE Research Initiative
February 2000 Commencement of Internet Trading
June 2000 Commencement of Derivatives Trading (Index Futures)
September 2000 Launch of 'Zero Coupon Yield Curve'
December 2000 Commencement of WAP trading
June 2001 Commencement of trading in Index Options
July 2001 Commencement of trading in Options on Individual Securities
November 2001 Commencement of trading in Futures on Individual
Securities
December 2001 Launch of NSE VaR for Government Securities
January 2002 Launch of Exchange Traded Funds (ETFs)
October 2002 Launch of NSE Government Securities Index
January 2003 Commencement of trading in Retail Debt Market
June 2003 Launch of Interest Rate Futures
August 2003 Launch of Futures & options in CNXIT Index
June 2004 Launch of STP Interoperability
August 2004 Launch of NSE’s electronic interface for listed companies
March 2005 ‘India Innovation Award’ by EMPI Business School, New
Delhi
June 2005 Launch of Futures & options in BANK Nifty Index
December 2006 'Derivative Exchange of the Year', by Asia Risk magazine
January 2007 Launch of NSE – CNBC TV 18 media centre
March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com
June 2007 NSE launches derivatives on Nifty Junior & CNX 100
October 2007 NSE launches derivatives on Nifty Midcap 50
January 2008 Introduction of Mini Nifty derivative contracts on 1st January
2008
March 2008 Introduction of long term option contracts on S&P CNX Nifty
Index
Technology
Across the globe, developments in information, communication and
network technologies have created paradigm shifts in the securities market
operations. Technology has enabled organizations to build new sources of
competitive advantage, bring about innovations in products and services, and to
provide for new business opportunities. Stock exchanges all over the world have
realized the potential of IT and have moved over to electronic trading systems,
which are cheaper, have wider reach and provide a better mechanism for trade
and post trade execution.
.
NSE believes that technology will continue to provide the necessary
impetus for the organization to retain its competitive edge and ensure timeliness
and satisfaction in customer service. In recognition of the fact that technology will
continue to redefine the shape of the securities industry, NSE stresses on
innovation and sustained investment in technology to remain ahead of
competition. NSE's IT set-up is the largest by any company in India. It uses
satellite communication technology to energize participation from around 320
cities spread all over the country. In the recent past, capacity enhancement
measures were taken up in regard to the trading systems so as to effectively
meet the requirements of increased users and associated trading loads. With up
gradation of trading hardware, NSE can handle up to 6 million trades per day in
Capital Market segment. In order to capitalize on in-house expertise in
technology, NSE set up a separate company, NSE.IT, in October 1999. This is
expected to provide a platform for taking up new IT assignments both within and
outside India and attaining global exposure.
NSE is one of the largest interactive VSAT based stock exchanges in the world.
Today it supports more than 3000 VSATs. The NSE- network is the largest
private wide area network in the country and the first extended C- Band VSAT
network in the world. Currently more than 9000 users are trading on the real
time-online NSE application. There are over 15 large computer systems which
include non-stop fault-tolerant computers and high end UNIX servers, operational
under one roof to support the NSE applications. This coupled with the nation
wide VSAT network makes NSE the country's largest Information Technology
user.
In an ongoing effort to improve NSE's infrastructure, a corporate network
has been implemented, connecting all the offices at Mumbai, Delhi, Calcutta and
Chennai. This corporate network enables speedy inter-office communications
and data and voice connectivity between offices
.
In keeping with the current trend, NSE has gone online on the Internet.
Apart from having a 2mbps link to VSNL and our own domain for internal
browsing and e-mail purposes, we have also set up our own Web site. Currently,
NSE is displaying its live stock quotes on the web site (www.nseindia.com) which
are updated online.
Secondary Market
(1) Corporate Securities: The stock exchanges are the exclusive centre’s for
trading of securities. Though the area of its recognition, they have been allowed
recently to set up trading terminals anywhere in the country. The three newly set
up exchanges (OTCEI, NSE and ICSE) were permitted since their inception to
have nation wide trading. The trading platforms of a few exchanges are now
accessible from many locations. Further, with extensive use of information
technology, the trading platforms of a few exchanges are also accessible from
anywhere through the Internet and mobile devices. This made a huge difference
in a geographically vast country like India.
(2) Exchange Management: Most of the stock exchanges in the country are
organized as “mutual’s” which was considered beneficial in terms of tax benefits
and matters of compliance. The trading members, who provide brokering
services, also own, control and manage the exchanges. This is not an effective
model for self-regulatory organizations as the regulatory and public interest of the
exchange conflicts with private interest. Efforts are on to demutualise the
exchanges whereby ownership, management and trading membership would be
segregated from one another. Two exchanges viz. OTCEI and NSE are
demutualised from inception, where ownership, management and trading are in
the hands of three different sets of people. This model eliminates conflict of
interest and helps the exchange to pursue market efficiency and investor interest
aggressively.
(3) Membership: The trading platform of an exchange is accessible only to
brokers. The broker enters into trades in exchanges either on his own account or
on behalf of clients. No stock broker or sub-broker is allowed to buy, sell or deal
in securities, unless he or she holds a certificate of registration granted by SEBI.
Over time, a number of brokers – proprietor firms – have converted themselves
into corporate. The standards for admission of members stress on factors, such
as corporate structure, capital adequacy, track record, education, experience,
etc. and reflect a conscious endeavor to ensure quality broking services.
(4) Listing: A company seeking listing satisfies the exchange that at least 10%
of the securities, subject to a minimum of 20 lakh securities, were offered to
public for subscription, and the size of the net offer to the public (i.e. the offer
price multiplied by the number of securities offered to the public, excluding
reservations, firm allotment and promoters contribution) was not less than Rs.
100 crores, and the issue is made only through book building method with
allocation of 60% of the issue size to the qualified institutional buyers. In the
alternative, it is required top offer at least 25% of the securities to public. The
company also required to maintain the minimum lever of non-promoter holding
on a continuous basis.
The basic norms for listing of securities on the stock exchanges are
uniform for all the exchanges. These norms are specified in the listing agreement
entered into between the company and the concerned exchange. The listing
agreement prescribes a number of requirements to be continuously complied
with by the issuers for continued listing and such compliance is monitored by the
exchanges. It also stipulates the disclosures to be made by the companies and
the corporate governance practices to be followed by them. SEBI has been
issuing guidelines/circulars prescribing certain norms to be included in the listing
agreement and to be complied with by the companies.
A listed company can voluntary delist its securities from non-regional stock
exchanges after providing an exit opportunity to holders of securities in the region
where the concerned exchange is located. An exchange can, however, delist the
securities compulsorily following a very stringent procedure.
(6) Trading Rules: Regulations have been framed to prevent insider trading as
well as unfair trade practices. The acquisitions and takeovers are permitted in a
well defined and orderly manner. The companies are permitted to buy back their
securities to improve liquidity and enhance the shareholder’s wealth.
(7) Price Bands: Stock Market volatility is generally a cause of concern for both
policy makers as well as investors. To curb excessive volatility, SEBI has
prescribed a system of price bands. The price bands or circuit breakers bring
about a coordinated trading halt in all equity derivatives markets nation-wide. An
index-based market-wide circuit breaker system at three stages of the index
movement either way at 10%, 15% and 20% has been prescribed.
(8) Demate Trading: The Depositories Act, 1996 was passed to proved for the
establishment of depositories in securities with the objective of ensuring free
transferability of securities with speed, accuracy and security by (a) making
securities of public limited companies freely transferable subject to certain
exceptions: (b) dematerialized the securities in the depository mode: and
providing for maintenance of ownership records in a book entry form. In order to
streamline both the stages of settlement process, the Act envisages transfer of
ownership of securities electronically by book entry without making the securities
move from person to person. Two Depositories, viz. NSDL and CDSL, have
come up to provide instantaneous electronic transfer of securities. At the end of
March 2002, 4,172 and 4,284 companies were connected to NSDL and CDSL,
respectively. The number of dematerialized securities increased to 56.5 billion at
the end of March 2002. As on the same date, the value of dematerialized
securities was Rs. 4,669 billion and the number of investor accounts was 46,
05,588. All actively traded scrip’s are held, traded and settled in demate form.
Demate settlement accounts for over 99% of turnover settled by delivery.
(9) Charges: A stock broker is required to any a registration fee of Rs. 5,000
every financial year, if his annual turnover does not exceed Rs. 1 crore. If the
turnover exceeds Rs.1crore during any financial year, he has to pay Rs. 5,000
plus one-hundredth of 1% of the turnover in excess of Rs. 1 crore. After the
expiry of five years from the date of initial registration as a broker, he has to pay
Rs.5, 000 for a block of five financial years. Besides, the exchanges collect
transaction charges from its trading members. NSE levies Rs.4 per lakh of
turnover.
(10) Trading Cycle: Rolling settlement on T+3 basis gave way to T+2 from April
2003. The market has moved close to spot/cash market.
(11) Risk Management: To pre-empt market failures and protect investors, the
regulator/exchanges have developed a comprehensive risk management system,
which is constantly monitored and upgraded. It encompasses capital adequacy
of members, adequate margin requirements, limits on exposure and turnover,
indemnity insurance, on-line position monitoring and automatic disablement etc.
They also administer an efficient market surveillance system to curb excessive
volatility, direct and prevent price manipulations.
COMPANY PROFILE
Vision
Our vision is to be the most respected company in the financial services
space. Having an vision gives an organization a sense of direction. It helps all
employees of the organization to channelize their efforts in the same direction
towards a common organizational goal and acts as a cornerstone too resolve
conflicts.
.
At India Infoline, we are convinced that even as a number of our peer
companies are focused on emerging as the biggest and the best in the financial
services space in India. We need to be most respected by our stake holders, our
customers, our employees, and by society in general.
India Infoline limited
India Infoline Ltd is listed on both the leading stock exchanges in India,
viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange
(NSE). The India Infoline group, comprising the holding company, India Infoline
Ltd and its subsidiaries, straddles the entire financial services space with
offerings ranging from Equity research, Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, Go bonds and other small savings instruments to loan
products and Investment banking. India Infoline also owns and manages the
websites,www.indiainfoline.com and www.5paisa.com
One finding morning in early 1999 a colleague had a crazy idea that if
the company made all the research available free on the web, the number of
users may well jumps from 250 to 2.5 million! To make it true the business
required a reincarnation. And the pre –requisite was a death. It meant that the
company put up all the information free on the website and let go of all the
revenues and profits. Worse, if the new avatar failed, there would be’ no
comebacks.
The idea was too compelling to worry about the consequences. Probity
took a whole-hearted plunge. The advertisement, alongside, said it all. The new
avatar business model took off. And it took off like a rocket! All employees, angel
investors and well-wishers were ecstatic little did they know that the rocket would
run out of fuel in mid-air. Venture capitalists and private equity investors lined up
to sign term sheets without even looking at the balance sheet. Indian Infoline
raised US$ 1 million in the first round and completed the second round at the
peak of dotcom euphoria around March 2000 and raised US$ 5million.
Circa 2001. The internet bubble started bursting faster than anybody
could have imagined. The dot com suffix, which was the sexiest tail to any
business name, suddenly became the worst stigma to have. Funding
disappeared completely, regardless of valuation, business model or management
depth. The company also had a crash landing and was forced to jettison a
number of plans including one to set up a TV channel. India Infoline decided
narrow its focus on business where it could leverage its core competencies to the
maximum. The key business lines that emerged were mutual funds, life
insurance and e-broking.
The company became heavily dependent on its e-broking business for
survival. The odds were against them. There was no money available from the
private equity investors at any valuation. All competitors were backed by
institutions or hand abundant capital. The core competitors of the company had
little experience of broking. There was a core group who never lost hope. They
cut all possible costs and worked on a bare bones structure. They survived
against all odds and started capturing market share. The company rose from
strength to strength to become the leading corporate agent in life insurance and
among the top retail players in mutual funds and broking space.
Along with its subsidiaries is a unique one stop Investment shop which
offers everything from information and advice to execution and service to the
retail customers for the entire gamut of investment products from risk free RBI
Bonds to high risk, high reward equities and also mutual funds and life insurance.
Various Services of India Infoline Ltd
India Infoline Securities
India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd,
which is engaged in the businesses of Equities broking and Portfolio
Management Services. It holds memberships of both the leading stock
exchanges of India viz. the Stock Exchange, Mumbai (BSE) and the National
Stock Exchange (NSE). It offers broking services in the Cash and Derivatives
segments of the NSE as well as the Cash segment Of the BSE.
ii. Directing
In this company the personnel manager coordinates various managers at
different levels as the personnel functions are concerned. The willing and
effective cooperation of employees for the attainment of organizational goals is
possible through proper directions.
iii. Controlling
In IISL, the controlling is done by the top management, in this aspect they do
auditing training programmes, directing morale surveys, conducting separate
interviews are some of the functions of the top management in controlling.
iv. Recruitment
It is the process of searching for prospective employees and stimulating them to
apply for jobs in the organization. In IISL, if they want any person, they will give
notification in newspaper in order to stimulate the eligible persons to apply for
that job.
v. Employee Relation
The company has recruited required personnel and trained them for
operations of the company at all braches and to maintain cordial relations
between the management and the employees.
vi. Employee Service
All the employees of the company from top to bottom dedicate their sincere
services with co-operation, co-ordination, hard work and team spirit which results
in successful performance of IISL which helped IISL to become of the best stock
broking firm in India.
vii. Selection
It is the process of ascertaining the qualifications, experience, skill, knowledge,
etc. of an applicant with a view to appraise his/her suitability to a job. The top
management in this organization shall do the selection. They send the letters of
appointment or rejection to the board of directors.
viii. Placement
It is the process of assigning the selected candidates with most suitable job. In
IISL, the directors do the selection of the candidates for placement. The
placement may be in the head office or in branches of IISL which are different
places.
ix. Training
The selected candidates will be shown placement in one of the branches of IISL
and are given proper training. The trainers are the most experienced persons.
One of the basic services provided by IISL as member of NSE and NSDL is to
facilitate transfer of securities from one demates account to the other on the
instruction of the account holder. In NSDL depository system both transfer and
the transferee have to give instructions to their DPs for delivering and receiving
of securities. However, the transferee can give ‘Standing Instructions (SI)’ to its
DP for receiving in securities. Transfer of securities from one demates account to
the other may be done for any of the following purposes: Transfer due to a
transaction done on a person to person basis i.e., an ‘off market’ trade Transfer
arising out of a transaction done on a stock Exchange. Transfer arising out of a
transmission and account closure.
The trading on stock exchanges in India used to take place through open outcry
without use of information technology for immediate matching or recording of
trades. This was time consuming and inefficient. This imposed limits on trading
volumes and efficiency. In order to provide efficiency, liquidity and transparency,
NSE introduced a nation-wide on-line fully-automated screen based trading
system (SBTS) where a member can punch into the computer quantities of
securities and the prices at which he likes to transact and the transaction is
executed as soon as it finds a matching sale or buy order from a counter party.
SBTS electronically matches orders on a strict price/time priority and hence cuts
down on time, cost and risk of error, as well as on fraud resulting in improved
operational efficiency. It allows faster incorporation of price sensitive information
into prevailing prices, thus increasing the informational efficiency of markets. It
enables market participants, irrespective of their geographical locations, to trade
with one another simultaneously, improving the depth and liquidity of the market.
It provides full anonymity by accepting orders, big or small, from members
without revealing their identity, thus providing equal access to everybody. It also
provides a perfect audit trail, which helps to resolve disputes by logging in the
trade execution process in entirety. This sucked liquidity from other exchanges
and in the very first year of its operation, NSE became the leading stock
exchange in the country, impacting the fortunes of other exchanges and forcing
them to adopt SBTS also. Today India can boast that almost 100% trading take
place through electronic order matching.
Technology was used to carry the trading platform from the trading hall of
stock exchanges to the premises of brokers. NSE carried the trading platform
further to the PCs at the residence of investors through the Internet and to
handheld devices through WAP for convenience of mobile investors. This made
a huge difference in terms of equal access to investors in a geographically vast
country like India.
NSE has main computer which is connected through Very Small Aperture
Terminal (VSAT) installed at its office. The main computer runs on a fault tolerant
broker enters the order through his PC, which runs under Windows NT and
sends signal to the Satellite via VSAT/leased line/modem. The signal is directed
to mainframe.
I. NEAT System
The NEAT system supports an order driven market, wherein orders match
on the basis of time and price priority. All quantity fields are in units and prices
are quoted in Indian Rupees. The regular lot size and tick size for various
a. Normal Market
Trade Orders and Stop Loss Orders depending on their order attributes.
c. RETDEBT Market
d. Auction Market
F. DELIVERIES DEPARTMENT
Deliveries department acts as an Intermediary between stock exchange
and clients and so proper knowledge is needed without which the results may be
hazardous.
G. Rolling Settlement for Demate Securities for both BSE and NSE:-
i. Introduction to Dematerialized Rolling Segment
and BSE.
b. At NSE, dematerialized securities are traded in two separate
except that the normal segment follows weekly account period settlement and
rolling settlement follows T+5 Settlement. For example, all trades executed on a
particular day (T), netted intra day, will be settled on the following fifth (T+5)
working day. The trades done on a day cannot be netted off against those done
on the earlier day. Trades executed on Monday will normally be settled on next
Monday (T+5). Both Pay-in and pay-out will be on the same day. The difference
CHAIRMAN
EXECUTIVE DIRECTOR
BOARD OF DIRECTORS
Mr. R Venkataraman
STOCK EXCHANGE
The term “STOCK EXCHANGE” implies is evident from the following feature of
an exchange.
S - Securities provider for investor
T - Tax benefits, planning and examples
0 - Optimum return of investments
C - Caution approach
K - Knowledge of Market
E - Eligibility for accruals
X - Exchange of securities transacted
C - Cyclopedia of listed companies
H - High yield
A - Authentic information
N - New entrepreneurs encouraged
G - Guidance to investors and companies
E - Equity cult
The Indian capital market has undergone numerous changes in over the
years. Traditionally stock market booms and decline have laid numerous
Problems for lay investors. A close interaction of these problems revealed that
these were due to paper based trading and settlement. The short learning of the
markets become manifest in the bad deliveries, delays in transfers and irregular
settlement etc. the remedial measure was dematerialization under the depository
system. With the introduction of de-mat system in 1996 and in effect from
January 1998, investors in capital market need to have de-mat a\c. and trading
a\c. stock broking houses play a vital role in this field. These stock broking
houses become depository participant of NSDL&CDSL arid help lay investors to
trade in capital markets without any hassles.
4. If registered with any other broker, then the name of broker and concerned
stock exchange and client code number.
5. Passport number /Driving license / Ration card/ voters card identity card.
6. Each client has to use one registration form. in case of joint names/family
members, a separate form has to be submitted from each person.
Brokerage:
Over the years stock markets matured as the platforms for making
Investments. Here we can’t forget the role played by SEBI(Securities Exchange
Board Of India). The regulations passed by SEBI in monitoring and controlling
the trading practices made it comfortable for the investors. Over the last few
decades, the average person’s interest in the stock market has grown
exponentially. What was once a toy of the rich has now turned into the vehicle of
choice for growing wealth. This demand coupled with advances in trading
technology has opened up the markets so that now a day nearly anybody can
own stocks.
Prior to SEBI there was not that awareness of the markets, investors used
to face so many problems with brokers. But after the concept of dematerialization
of Stocks it was made easy. As the next step exchanges like BSE (Bombay
Stock Exchange) and NSE (National Stock Exchange) allowed with some criteria
“Online Trading in Equity & Derivative Markets”.
Today there are so many Stock Broking Houses offering these online
trading services, among which India Infoline Ltd is one of the largest service
provider.
India Infoline converts the paper shares into the electronic shares through
D-MAT process. Clearing and settlement of trades, dematerialization of shares,
providing market information to the clients are daily chores in India Infoline, apart
form trading.
DOCUMENTATION
The trading member or stockbroker shall enter into an agreement in the
specified format provided by NSE with the client before accepting orders on
latter’s behalf. The said agreement shall be executed on non-judicial stamp
paper of adequate value, duly signed by both the parties on all the pages. This
agreement is known as ‘Member Constraint Agreement’. Copy of this agreement
is to be kept with the trading member permanently.
Similarly, the sub-broker shall enter into an agreement with the client
before placing orders, with shall be executed on non-judicial stamp paper. The
client should provide information to the sub-brokers in the ‘client registration
application form’.
NEAT System
The NEAT system supports an order driven market, wherein orders match
on basis of time and price priority. All quantity fields are in units and prices are
quoted in Indian Rupees. The regular lot size and tick size for various securities
traded is notified by the exchange from time to time.
Market Phase
The system is normally made available for trading on all days except
Saturdays, Sunday & other holidays.
Pre-open phase:
The pre-open period is relevant only in the normal market. Order
matching takes place at the end of the session, based on which an opening price
is computed & assigned to all trades of pre-open.
Opening:
In this period, all orders that have been entered in the pre-open phase are
matched. During this phase, the trading member cannot login to the system. If
the member is already logged in the cannot perform trading activities till market is
opened.
Open Phase:
The open period indicates the commencement of trading activity. To
signify the start of a trading, a message is sent to all the trade workstation. Order
entry is allowed when all the securities have been opened. During this phase,
orders are matched on a continuous basis. Trading in all the instruments is
allowed unless they are specifically prohibited by the exchange. The activities
that are allowed at this stage are:
Inquiry: Inquiry about the market status, the shares and their prices.
Order entry: Placing an order to buy or sell the scrips by quoting the price
and the quantity of the share.
Order modification: Modifying the order that has been already placed. The
modification may be with respect to price or quantity.
Order cancellation: The order placed already can also be cancelled if the
price or the quantity of scrip is not satisfactory. Order cancellation also
includes quick order cancellation.
Market close:
Where the market closes, trading in all instruments for that market
comes to an end. No further orders are accepted, but the user is permitted to
perform activities like inquiries.
Surcon:
Surveillance and control (SURCON) is that period after market close
during which, the users have inquiry access only. After the end of SURCON
period, the system processes the data for making the system available for the
next trading day. When the system starts processing data, the interactive
connection with the BOLT system is lost and the message to that effect is
displayed at the trader workstation.
The NSE opens at 9.55 a.m. and the trading starts at 10.00 a.m. 5
minutes is given for the stockbrokers to quote their price and to get a recap of the
yesterdays prices of different scrips. The trading ends at 3.30 P.m. The auction
market starts at 4.00 p.m. and continues till 4.30 after normal on-line trading. In
BSE, the trade starts at 9.55 a.m. and ends at 3.30 p.m. A grace time of 20
minutes from 3.40p.m. to 4.00 p.m. is given in BSE as ‘End of the Session’ for
trading.
Back Office
To calculate the net mark to market value, Bhav copy file is imported from
NSE/BSE. Net mark to market value is to be known to know the profit or loss
position of the client, basing on which the Trading Manager of India Infoline will
decide whether the client can trade or not for the next day on comparing it with
the margin paid by the client.
After importing the Bhav copy file, the trading module is opened. In
trading module, the sauda status is known from the Sauda Manager’. Sauda
manager is the number of trade confirmations recorded. Confirmation of trading
transaction with brokerage commission is known as ‘Sauda’.
After Sauda Manager, Net positions process is done. In the net positions
process, cumulative net positions reports, client-wise net position reports and
other reports are made and are sent to clients and to the accounts department.
The bills are prepared and are sent to the respective clients.
REPORTS
After selecting ‘REPORTS’ option from main menu, the member bas to
specify the criteria for which the report is needed. The types of reports that may
be generated are: deliveries reports; receipts reports; obligations reports;
custodial trades reports; bad deliveries reports; funds reports; auctions reports;
objections reports; margins reports; securities reports and miscellaneous reports.
The daily reports of various aspects relating to the trading activities are
maintained.
CLEARING
Settlement of trades transacted on an exchange requires smooth,
preferably instantaneous, movement of securities and funds in accordance with
the prescribed schedule of pay-in / pay-out. Movement of securities has been
almost instantaneous in the dematerialized environment. Two depositories are in
place to provide electronic transfer of securities. 10 major stock exchanges
accounting for about 99% of turnover have been connected to depositories. All
actively traded scrips are held, traded and settled in de-mat form. NSE follows a
different model where a clearing corporation guarantees settlement obligations
emanating from trades.
SETTLEMENT
The trades accumulated over a trading cycle are clubbed together at the
end of the trading cycle, positions (trades) are netted and the balance obligations
are settled.
There are two main types of settlements:
Fixed or Account Period Settlement
Rolling Settlement
Rolling Settlement
In contrast to account period settlement, under rolling settlement all open
positions at the end of a date ‘T’ mandatory results in delivery and payment of ‘X’
working days later. In other words, all the net obligations at the end of day’s
trading are to be settled by exchange of funds and delivery on the fifth day from
the trading day. This method of trading and settlement process is called ‘Rolling
Settlement’.
In both the types of settlement, for confirmed trades, the settling bank will
arrange for payment and clearance and depository for effecting transfers by
electronic book entry system. Canara bank provides the clearinghouse facility.
COST OF TRADING
The various costs involved in the process of online trading are as follows:
Margins,
Brokerage,
Service tax,
Stamp duty.
Margins
The base capital to set up a trade centre is one crore rupees. Earlier, IIL
paid Rs. 75 lakhs as base capital when it was set-up. The trade corporation has
to maintain a reserve of some amount with NSE where 30% -50% will be in the
form of cash and the remaining in the form of bank guarantees (securities),
FDR’s etc. IIL has 7.5. crores as margin with NSE at present.
Gross intra-day turnover (buy and sell) of a member shall not exceed 33
1/3 time the base capital. Gross exposure of a member at any time shall not
exceed 8.5 times the free base capital of one crore rupees and not exceed 12
times over the free base capital of one crore rupees.
Brokerage
Brokerage is of two types:
Delivery Brokerage
This brokerage is charged where there may be buying or selling lot
remaining at the end of the days trade. The delivery brokerage is charged from
0.3% to 0.5%.
As per SEBI, maximum brokerage shouldn’t exceed 2.5% both in BSE and
NSE. For retail clients, the brokerage charged is 0.7%. A sub-broker charge
2.5% from the clients to sell or buy the shares out of which, India Infoline charges
1% from the sub-broker.
Service tax
In India Infoline, 5% service tax on brokerage is collected from the clients.
Stamp duty
If the stamp duty of 0.006% on turnover is Rs30 or more, only Rs30 is
collected in NSE. In BSE, the minimum is 1Re and the maximum stamp duty is
unlimited.
ACCOUNTS
The Accounts/ Finance department maintains the accounts in India
Infoline. The accounts are prepared in three forms. They are:
Client-wise net positions,
Scrip-wise net positions,
Pay-in and Pay-out settlement of funds.
De-mat Process
When a client places his physical shares for de-mat, India Infoline after
inputting the information in depository participants sends the physical shares to
the company, which issued the shares. The client code number and the
information and the clients signature is sent to Share Holding Registrar.
There they verify whether the shares really belong to the client and
whether the signature is matching or not. Once they are satisfied that the
information sent through the DP’s are right, the shares are cleared and the
information is passed on to the client. The physical shares are then torn away as
they already exist in electronic form.
Advantages of Dematerialization
The process of transfer of securities became faster. The fear of loosing the
share certificates is not there because of dematerialization. Theft, forgery,
mutilation of certificates is not found in dematerialization.
INTERMEDIARIES
There are no intermediaries in between India Infoline and NSE or BSE.
Similarly there are no intermediaries in between India Infoline and professional
clients. Since India Infoline is a share broker to NSE and BSE the clients
operating in India Infoline directly, on behalf of other clients are sub-brokers to
the ultimate clients who doesn’t operate the trade directly. So, there may be sub-
brokers as intermediaries in between India Infoline and clients who do not trade
directly in India Infoline.
MARKET INFORMATION
In India Infoline, daily the research analyst collects the market information
and it is analyzed. The market information is used to forecast the index
movement, price movement of the shares and enables the clients to make use of
the information in trading to get better results.
The research analyst in forecasting the market movement follows the
technical analysis, fundamental analysis and efficient market hypothesis. The
research analyst collects the information about the company, the industry and the
economy through different media to know the company’s position.
The research analyst follows the market closely by watching the price
movement of the shares in the market. The technical analysis is very helpful in
making investment decisions. The research analyst follows different tools of
technical analysis like Japanese candlestick method; Elliot wave theory; Dow
theory; price trends and volume trends; volatility; floating stock and volume of
trade etc., to assess the market. Technical analysis reveals the movement of the
scrip. It explains when to buy a share and when to sell. So, the research analyst
gives much important to the technical analysis to forecast the price movement of
the scrip accurately.
Since, the NSE & BSE are markets with strong form efficiency, as the
market discounts the information itself very quickly and changes as per the
information, the research analyst has only fewer jobs to do here.
The research analyst not only analyses the marketing information but,
every day in India Infoline an edition of the research analyst’s, suggestions on
scrips that have to be bought and sold is also printed which helps the clients of
India Infoline to invest in shares that are profitable. Mostly, the predictions of the
research analyst about the market movement prove to be accurate. So market
information in India Infoline is trust worthy.
LEGAL FRAMEWORK
It deals with legislative and regulatory provisions relevant from the
viewpoint of a dealer. The legality of trading is through the various acts and
regulators of stock exchange. Before 1992, the three principal acts governing
the securities market were:
Regulators
The responsibility for regulating the securities market is shared by
Department of Economic Affairs (DEA), Department of Company Affairs (DCA),
RBI; Securities Exchange Board of India (SEBI) and Securities Appellate
Tribunal (SAT).
MOCK TRADING
BSE conducts mock trading for all its trading members. The mock trading
usually takes place once in a month or in two months.
Mock – trading is a process where the regular online trading is done at all
the trade workstations, which are registered with BSE. Though the on-line trading
is done, payment of funds or deliveries doesn’t take place. Though the trade
results in turnover in crores there is no transfer of funds or share certificates.
The mock-trading process is similar to the regular trading process. Mock trading
is generally done on Saturdays as it is not a working day for the stock exchange
and it doesn’t affect the daily trade in BSE.Mock- trading enables the operators to
operate efficiently and to adjust to the changes made if any in the trading system.
SMS Alerts
Customers can activate / de-activate / modify their mobile number for the
SMS Alerts facility by either of the means mentioned below:
Just login to indiainfoline.com - Click on My Account -Click on Get Your SMS
Alerts Now OR Just login to indiainfoline.com - Click on Customer Service - Click
on Get Your SMS Alerts Now OR Just login to indiainfoline.com - Click on
Trading Tools -- Click on Get Your SMS Alerts Now
The charges applicable for availing the said facility are as follows:
Rs. 100/- pm (For Gateway, Freeway and High Trader Accounts) Rs. 75/- pm
(For Value Account). Please note that the above-mentioned charges shall be
debited to the ledger as soon as the said service is activated.
CHAPTER – IV
TABULATION AND ANALYSIS
TABLE – 1 TABLE SHOWING NIFTY MOVEMENT
DURING 02.05.2008 TO 09.05.2008
5300
5265.29
5250
5228.2 5227.25
5200 5192.25 5192.35
5150 5156.7
5144.64 5135.5 5135.79
5100
5081.7
5070.85
5050
5000
4982.6
4950
2-May 5-May 6-May 7-May 8-May 9-May
OPENING CLOSING
TABLE ANALYSIS:-
On the 02-05-2008 the Nifty open at 5265.29 and closed at 5228.20 with a
decrease of 37.09 points.
On the 05-05-2008 the Nifty open at 5227.25 and closed at 5192.25 with a
decrease of 32 points.
On the 06-05-2008 the Nifty open at 5192.35 and closed at 5144.64 with a
decrease of 47.71 points.
On the 07-05-2008 the Nifty open at 5156.70 and closed at 5135.50 with a
decrease of 21.2 points.
On the 08-05-2008 the Nifty open at 5135.79 and closed at 5081.70 with a
decrease of points.
On the 09-05-2008 the Nifty open at 5070.85 and closed at 4982.60 with a
decrease of 54.09 points.
GRAPH ANALYSIS:-
In the first week of May the NSE nifty there was a positive opening with
5265.29 points and on 9th may it closed with 4982.60. In this week there is an
increase in fuel prices. This hike in fuel prices had fall great impact on the rest of
the sectors. IT, consumer goods &realty pharmacy and retail sectors. Due to
these investors does not pay any interest in buying the shares at the end of the
week and at the middle of the week. In this week the nifty down with 282.69
TABLE-2 TABLE SHOWING NIFTY MOVEMENT
DURING 12.05.2008 TO 20.05.2008.
5200.00
5050.00
5012.64 5008.60 5011.75 5010.89
5000.00
4981.00
4950.00 4953.79 4958.45
4900.00
12-May 13-May 14-May 15-May 16-May 20-May
OPENING CLOSING
TABLE ANALYSIS:-
On the 12-05-2008 the Nifty open at 4981.00 and closed at 5012.64 with an
increase of 31.64 points.
On the 13-05-2008 the Nifty open at 5008.60 and closed at 4953.79 with a
decrease of 54.85points.
On the14-05-2008 the Nifty open at 4958.45 and closed at 5011.75 with a
increase of 53.3 points.
On the 15-05-2008 the Nifty open at 5010.89 and closed at 5115.25 with an
increase of 104.36 points.
On the 16-05-2008 the Nifty open at 5115.64 and closed at 5157.70 with an
increase of 42.06 points.
On the 20-05-2008 the Nifty open at 5157.00 and closed at 5104.95 with a
decrease of 142.35 points.
GRAPH ANALYSIS:-
In this week the NSE opened with 4981.00 points which is less than the
previous week opening. Because of previous week fluctuations the investor did
not invest their shares in IT and pharmacy sectors .but the quarterly results of IT
companies Satyam, Infosis and Tcs has shown major profits .due to this the
realty &banking shares value increased. Finally the nifty had closed by 5104.95
points with an increase of 123.95
TABLE – 3 TABLES SHOWING NIFTY MOVEMENT
DURING 21.05.2008 TO 28.05.2008.
5150.00
5117.64
5105.70 5117.00
5100.00
5050.00
5025.45 5026.54
5000.00
4800.00
21-May 22-May 23-May 26-May 27-May 28-May
OPENING CLOSING
TABLE ANALYSIS:-
On the 21-05-2008 the Nifty open at 5105.70 and closed at 5117.64 with a
increase of 11.94 points.
On the 22-05-2008 the Nifty open at 5117.00 and closed at 5025.45 with a
decrease of 91.55 points.
On the 23-05-2008 the Nifty open at 5026.54 and closed at 4946.54 with a
decrease of 80 points.
On the 26-05-2008 the Nifty open at 4953.60 and closed at 4875.04 with a
decrease of 78.56 points.
On the 27-05-2008 the Nifty open at 4877.14 and closed at 4859.79 with a
decrease of 17.35 points.
On the 28-05-2008 the Nifty open at 4862.70 and closed at 4918.35 with
increase of 55.65 points.
GRAPH ANALYSIS:-
In this week there observes a good opening value of NSE with 5105.70
point compared to previous week the nifty value increased. In this week the RBI
has increased the interest rates over the banks and FII’S. Due to this investors
did not go forward to invest in the realty and IT sectors. As the result the Nifty
ended with 4918.35 points with a loss of 187.35 points
TABLE – 4 TABLE SHOWING NIFTY MOVEMENT
DURING 29.05.2008 TO 05.06.2008.
4950.00
4926.29
4900.00
4870.10 4869.25
4850.00 4835.29 4844.00
4800.00
4750.00 4739.60 4739.30
4715.90 4718.70
4700.00
4676.85
4650.00
4600.00 4585.60 4586.95
4550.00
4500.00
29-May 30-May 2-Jun 3-Jun 4-Jun 5-Jun
OPENING CLOSING
TABLE ANALYSIS:-
On the 29-05-2008 the Nifty open at 4926.29 and closed at 4835.29 with a
decrease of 91 points.
On the 30-05-2008 the Nifty open at 4844.00 and closed at 4870.10 with a
increase of 21.10 points.
On the 02-06-2008 the Nifty open at 4869.25 and closed at 4739.60 with a
decrease of 129.65 points.
On the 03-06-2008 the Nifty open at 4739.30 and closed at 4715.90 with a
decrease of 23.4 points.
On the 04-06-2008 the Nifty open at 4718.70 and closed at 4585.60 with a
increase of 133.1 points.
On the 05-06-2008 the Nifty open at 4586.95 and closed at 4676.85 with a
increase of 89.9 points.
GRAPH ANALYSIS:-
In this week the NSE open with 4926.29 points .the downtrend of market
had continued in this also. As the result of this all the top sectoral shares has fell
down i.e. CG, power, IT metal and oil. These shares are traded in downfall stage
during this week also. As the investors had done heavy sell off in realty and
metals. As the result the market had ended by 4676.85 points with a max
decrease of 249.44 points
TABLE – 5 TABLE SHOWING NIFTY MOVEMENT
DURING 06.06.2008 TO 16.06.2008
4700.00
4680.55
4650.00
4627.80 4626.45
4600.00
4572.50
4550.00 4539.50 4536.30
4522.00 4523.60 4517.10
4500.00 4500.95
4469.65
4450.00 4449.80
4400.00
6-Jun 9-Jun 10-Jun 11-Jun 13-Jun 16-Jun
OPENING CLOSING
TABLE ANALYSIS:-
On the 06-06-2008 the Nifty open at 4680.55 and closed at 4627.80 with a
decrease of 52.75 points.
On the 09-06-2008 the Nifty open at 4626.45 and closed at 4500.95 with a
decrease of 125.5 points.
On the 10-06-2008 the Nifty open at 4522.00 and closed at 4449.80 with a
decrease of 72.2 points.
On the 11-06-2008 the Nifty open at 4469.65 and closed at 4523.60 with a
increase of 62.95 points.
On the 13-06-2008 the Nifty open at 4539.50 and closed at 4517.10 with a
decrease of 22.4 points.
On the 16-06-2008 the Nifty open at 4536.30 and closed at 4572.50 with a
increase of 36.2 points.
GRAPH ANALYSIS:-
During this week the NSE opened with 4680.5 points. In his week the NSE
indices were down trend due to drop in Chinese stock and losses in outsourcing
firms on concerns about the strength of the rupee value. As the result power, oil,
FMCG, shares fell down and the realty, banking shares follow the same path.
And at the end of week the C.G. had gain in the market .due to this the market
slightly increases. As the result the NSE ended with 4572.50 with a decrease of
108.05 points.
TABLE – 6 TABLES SHOWING NIFTY MOVEMENT
DURING 17.06.2008 TO 24.06.2008.
5000.00
4900.00 4919.10
4800.00
4700.00
4653.00 4652.80
4600.00 4572.50 4582.40 4582.55
4500.00 4504.25 4504.20
4400.00
4347.55 4351.15
4300.00 4271.05
4266.40
4200.00
17-Jun 18-Jun 19-Jun 20-Jun 23-Jun 24-Jun
OPENING CLOSING
TABLE ANALYSIS:-
On the 17-06-2008 the Nifty open at 4572.50 and closed at 4653.00 with an
increase of 80.5 points.
On the 18-06-2008 the Nifty open at 4652.80 and closed at 4582.40 with a
decrease of 70.4 points.
On the 19-06-2008 the Nifty open at 4582.55 and closed at 4504.25 with a
decrease of 78.3 points.
On the 20-06-2008 the Nifty open at 4504.20 and closed at 4347.55 with a
decrease of 156.65 points.
On the 23-06-2008 the Nifty open at 4351.15 and closed at 4266.40 with a
decrease of 84.75 points.
On the 24-06-2008 the Nifty open at 4271.05 and closed at 4919.10 with a
increase of 648.05 points.
GRAPH ANALYSIS:-
In this week the NSE opened with 4572.50 points and ended by 4919.10
points with an increase of 346.60 points. In this week the NIFTY ended flat.
IT shares were offset by losses in auto and cement counters where as on
Tuesday. The Nifty had traded normally during this week .But at the end of
week it has increased to a peak value which made all investors a great
recovery from their losses. Overall the market had traded in good time
during this week.
TABLE - 7 TABLE SHOWING NIFTY MOVEMENT
DURING 25.06.2008 TO 30.06.2008.
4350.00
4300.00 4315.85 4315.30
4250.00 4252.65 4252.60
4200.00 4189.60
4150.00 4136.65 4136.25
4100.00
4050.00 4040.55
4000.00
3950.00
3900.00
25-Jun 26-Jun 27-Jun 30-Jun
OPENING CLOSING
TABLE ANALYSIS:-
On the 25-06-2008 the Nifty open at 4189.60 and closed at 4252.65 with an
increase of 63.05 points.
On the 26-06-2008 the Nifty open at 4252.60 and closed at 4315.85 with an
increase of 63.25 points.
On the 27-06-2008 the Nifty open at 4315.30 and closed at 4136.65 with a
decrease of 178.65points.
On the 30-06-2008 the Nifty open at 4136.25 and closed at 4040.55 with a
decrease of 45.7 points.
GRAPH ANALYSIS:-
In this week the NSE opened with 4189.60 points and ended by 4040.55
points with a decrease of 149.05 points. This week the market is likely to
follow the continuing downward trend. Institutional investors are unlikely to
buy into a market that has caught onto a downward momentum.
Institutional investors were to face redemption pressure going ahead as
corporate results fail to satisfy market expectations.
CHAPTER – V
SUMMARY
FINDINGS
SUGGESTIONS
SUMMARY
The India Info line group has a significant presence across the country
with over 500 branches in over 300 cities across India. All these Offices are
networked and are connected with the corporate office in Mumbai. The Group
has invested significantly in technology and research, the results of which are
there for everyone to see. The 5paisa trading is one of the most advanced
Platforms available to retail investor in India. The group has memberships on
BSE and NSE for equities trading, depository participant with NSDL and CDSL
and on MCX and NCDEX for commodities trading. It has a SEBI license for
portfolio Management under which, various schemes are offered.
The company offers the products and financial services space with
offerings ranging from Equity research, Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, Go bonds and other small savings instruments to loan
products and Investment banking.
India Infoline Ltd is listed on both the leading stock exchanges in India,
viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange
(NSE). The India Infoline group, comprising the holding company, India Infoline
Ltd and its subsidiaries, straddles the entire financial services space with
offerings ranging from Equity research, Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, Go bonds and other small savings instruments to loan
products and Investment banking. India Infoline also owns and manages the
websites,www.indiainfoline.com and www.5paisa.com
India Infoline Limited has fixed its issue price at Rs 76 per Equity share.
The 100% book-built issue offering 1.19 crore shares in the price band of Rs 70-
80 closed on April 27, 2005 and were oversubscribed 7.22 times. While the QIB
portion was oversubscribed 10.49 times, the non-institutional investors segment
was oversubscribed 5.64 times.
India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd,
which is engaged in the businesses of Equities broking and Portfolio
Management Services. It holds memberships of both the leading stock
exchanges of India viz. the Stock Exchange, Mumbai (BSE) and the National
Stock Exchange (NSE). It offers broking services in the Cash and Derivatives
segments of the NSE as well as the Cash segment Of the BSE.
The Indian capital market has undergone numerous changes in over the
years. Traditionally stock market booms and decline have laid numerous
Problems for lay investors. A close interaction of these problems revealed that
these were due to paper based trading and settlement. The short learning of the
markets become manifest in the bad deliveries, delays in transfers and irregular
settlement etc. the remedial measure was dematerialization under the depository
system. With the introduction of de-mat system in 1996 and in effect from
January 1998, investors in capital market need to have de-mat a\c. and trading
a\c. stock broking houses play a vital role in this field. These stock broking
houses become depository participant of NSDL&CDSL arid help lay investors to
trade in capital markets without any hassles.
The NSE opens at 9.55 a.m. and the trading starts at 10.00 a.m. 5
minutes is given for the stockbrokers to quote their price and to get a recap of the
yesterdays prices of different scrips. The trading ends at 3.30 P.m. The auction
market starts at 4.00 p.m. and continues till 4.30 after normal on-line trading. In
BSE, the trade starts at 9.55 a.m. and ends at 3.30 p.m. A grace time of 20
minutes from 3.40p.m. to 4.00 p.m. is given in BSE as ‘End of the Session’ for
trading.
To know the trade position, back-office is done in India Infoline everyday
immediately after the trade ends. ‘INFOLINE PACK’ is the package used in back
office system.
The main modules of back office system are:
• Trading
• Finance
• Clearing
• Business & Administration
• Import Export
• Housekeeping
• Margins
In the back office, first the Import Export module is opened where the
trade file of the days trade is collected and the text file if imported to the system.
There, the old closing prices are inserted by new prices from the Bhav copy file.
Bhav copy is the average of last half-an-hour prices of the scrip’s
The base capital to set up a trade centre is one crore rupees. Earlier, IIL
paid Rs. 75 lakhs as base capital when it was set-up. The trade corporation has
to maintain a reserve of some amount with NSE where 30% -50% will be in the
form of cash and the remaining in the form of bank guarantees (securities),
FDR’s etc. IIL has 7.5. Crores as margin with NSE at present.
Gross intra-day turnover (buy and sell) of a member shall not exceed 33
1/3 time the base capital. Gross exposure of a member at any time shall not
exceed 8.5 times the free base capital of one crore rupees and not exceed 12
times over the free base capital of one crore rupees.
As per SEBI, maximum brokerage shouldn’t exceed 2.5% both in BSE and
NSE. For retail clients, the brokerage charged is 0.7%. A sub-broker charge
2.5% from the clients to sell or buy the shares out of which, India Infoline charges
1% from the sub-broker.
The net positions of each client at the end of the day are prepared and a copy is
sent to the client. This is the settlement wise pay-in/pay-out funds statement. It is
similar to trial balance. Delivery out is termed as pay-in and receipt in is termed
as pay-out. The pay-out for India Infoline are debited and the pay-in for India
Infoline is credited. This statement includes other expenses in trading like
brokerage, delivery commission, stamp duty etc
When a client places his physical shares for de-mat, India Infoline after
inputting the information in depository participants sends the physical shares to
the company, which issued the shares. The client code number and the
information and the clients signature is sent to Share Holding Registrar
In India Infoline, daily the research analyst collects the market information
and it is analyzed. The market information is used to forecast the index
movement, price movement of the shares and enables the clients to make use of
the information in trading to get better results.
BSE conducts mock trading for all its trading members. The mock trading
usually takes place once in a month or in two months.
Mock – trading is a process where the regular online trading is done at all
the trade workstations, which are registered with BSE. Though the on-line trading
is done, payment of funds or deliveries doesn’t take place. Though the trade
results in turnover in crores there is no transfer of funds or share certificates.
The mock-trading process is similar to the regular trading process.
FINDINGS
It is observed that market fluctuations day by day as there is a raise or fall
in the market Nifty points and specific reasons for such the during the
project period raise or fall are also analyzed.
During the month of May, where Inflation spiked to 3 1/2 year high. From
there on, The Government intensified its fight against inflation.
Indian economy received another jolt with the industrial output falling to a
six-year low for the month of March.
High interest rates, coupled with spiraling costs and a US-led global
slowdown hit industrial activity during the last month of FY08. Industrial
production grew by just 3% in March as against 8.6% in February.
In the month of June, Government finally bit the bullet on the fuel price
hike issue and announced a package, comprising a mix of price increases
and duty changes to enable the public sector oil marketing companies to
combat high crude oil prices.
Crude oil prices further accelerated, touching a new all-time high of nearly
US$142 per barrel in electronic trading.
SUGGESTIONS
They can increase the total number of customers trading per day there is still
lot of potential is there with existing client base. This can be achieved by
increasing activation staff.
Since the internet trading is newly introduced in India the customer support
should guide the customers while trading.
FINANCIAL ANALYST
BUSINESS INDIA
BUSINESS WORLD
WEBSITES:
www.nseindia.com
www.bseindia.com
www.googlesearch.com
www.vantagetrade.com
www.indiainfoline